ASX 200 rises after May retail sales beat; ACCC nod to Armaguard save; APA reveals Qenos closure hit; Booktopia in administration

May retail sales, building approvals higher than expected. ACCC's interim nod to Armaguard save. Booktopia enters administration. AusSuper's 'solid' returns. APA flags $145m Qenos hit.

Discretionary items retailers have been warning of ongoing challenges as customers curb spending due to cost of living pressures. May retail sales data will give a measure of this reluctance. Picture: Gaye Gerard

Welcome to the Trading Day blog for Wednesday, July 3. The ASX 200 index closed 0.3 per cent higher to 7739.90 points.

The Aussie dollar is trading around US66.76c at 5.05pm AEST after the release of May retail sales figures.

Updates

4:54 pm July 3, 2024

ASX 200 ends up 0.3pc; commodities rise

David Rogers

Australia's share market edges up in quiet trade before Thursday's US holiday.

The S&P/ASX 200 index ends up 0.3 per cent at 7739.9 on trading value about 20 per cent below average.

After dipping to 7718.20 as stronger-than-expected retail sales fuelled interest rate jitters, the index rose to 7744.1 as the ABS said retail sales were "boosted" by early end-of-financial year sales, and as industrial commodity prices rose.

Tech was strongest as WiseTech up 2.1 per cent after the Nasdaq 100 hit a record high as Tesla soared 10 per cent and Amazon, Apple and Microsoft hit records.

Materials, property and energy also outperformed.

BHP rose 1.1 per cent as Singapore iron ore futures rose 2.2 per cent to a two-month high of $US112.50 a tonne.

Whitehaven rose 3.8 per cent amids Anglo American's Grosvenor mine fire.

Oil producers stalled but crude oil hit a two-month high of $US87.70 amid rising Middle East tensions. Comex copper rose 0.9 per cent to $US4.4585 a pound.

FOMC minutes and ISM non-manufacturing index are due overnight.

Markets may be volatile with the US closed, the UK going to the polls on Thursday and the next round of French parliamentary elections due on Sunday.

The US market will close at 1pm AEST for Independence Day.

3:13 pm July 3, 2024

NSW director cops five-year ban

Joseph Carbone

ASIC disqualifies Christian Oey from managing corporations for five years due to his involvement in three failed companies.

ASIC found Mr Oey, from Dural, NSW, was director of two financial services companies — Clickthru and O'Corp Media — from 1999 to 2018, during which time he failed to meet tax obligations, improperly used his position to gain an advantage and led to the detriment of other companies, continued incurring debts for Clickthru while the company was insolvent and breached Federal Court undertakings in relation to the property of O’Corp Media.

ASIC also found from 2019 to 2021, Mr Oey, as an officer of Cornerstone Growth Capital, used monies on trust improperly and to the detriment of investees.

Currently the three companies owe more than $5.8m to creditors.

The five-year ban is the maximum penalty.

2:11 pm July 3, 2024

Chalice shares slump on partner update

Valerina Changarathil

Investors in potential takeover target Chalice Mining may be running out of patience as the quest for a supportive partner for its promising Gonneville platinum-nickel project in Western Australia gets extended to at least the middle of next year.

On Wednesday, Chalice, which counts prominent businessman Timothy Goyder as a significant shareholder with his 10.4 per cent stake, named Mitsubishi Corporation as a potential partner after 12 months of “extensive due diligence and discussions”. Formal talks are now underway for a potential deal within 90 days of the completion of its ongoing project pre-feasibility study, scheduled for completion by this time next year.

Shares in Chalice were down 14 per cent to $1.31 in afternoon trading.

Chalice and Mitsubishi Corporation have entered into a non-binding Memorandum of Understanding, which establishes a general framework for collaboration on technical, financing, marketing and offtake aspects of the project during the ongoing PFS. It enables the parties to work jointly to further refine the scope of the project prior to working out a potential joint arrangement and investment partnership. In the meantime, Chalice told investors, it is fully funded to complete the PFS.

It has taken Chalice months to get to this stage, after major miners Rio Tinto, South32 and Anglo American appeared to pull out of a partial or complete takeover of the group, which had also received approaches from large and mid-cap Australian miners, in August last year. Chalice’s major green field discovery in early 2020 hosts a mix of critical green metals required for decarbonisation, including nickel, copper, cobalt, palladium and platinum.

Chalice chief executive Alex Dorsch on Wednesday said the potential partners are "excited to work together" over the next phase of project studies towards delivery of the PFS in mid-2025 and targeted final investment decision in late 2026.” “From the outset of the strategic process, Mitsubishi was always considered one of the most impressive and best suited strategic partners for the Gonneville Project, based on its decades-long development, operational and trading track record,” Mr Dorsch said.

Mitsubishi Corporation executive Kota Ikenishi said Gonneville “has the potential to become a large-scale, globally significant critical minerals asset, and its US IRA-qualifying suite of metals could have a strategic importance for Japan in the future”. “We are excited to work together with Chalice and leverage our complementary skillsets to advance the project as we explore the possibility of formalising a potential long-term partnership.”

1:30 pm July 3, 2024

Is Domino's store rollout below expectations?

David Rogers

Domino's FY24 rollout appears to have fallen short of expectations with the company’s website indicating the company had 3,842 stores on 3 July, below Visible Alpha consensus of 3,894, according to Citi.

"This suggests there has only been 60 net new openings over FY24, 46 per cent below VA consensus of 111," says Citi analyst Sam Teeger.

While the FY24 net rollout is adversely impacted by 18 closures in 1H, a step up in VA Consensus FY25 rollout estimates to 146 net additions, "may be optimistic", as the Japan store network could shrink before it grows again, and franchisee profitability may be impacted by a new challenge in increasing cheese prices.

But the store numbers on the company’s website can be delayed up to 14 days, so it's possible but unlikely that Domino's has met rollout expectations.

Citi recently upgraded the stock to Buy after investor tours in Germany and France, which led it becoming cautiously optimistic that improvements may become visible from FY25.

DMP last up 0.8 per cent at $35.085.

12:57 pm July 3, 2024

ASX 200 up 0.3pc in quiet trade

David Rogers

Australia's share market is slightly higher after positive US leads and commodity price gains, but it's very quiet before Independence Day in the US.

The S&P/ASX 20 index rises 0.3 per cent to an intraday high of 7743.3.

The index recovered from an intraday dip to 7718.2 which was partly fuelled by higher than expected retail sales data reinforcing rate hike jitters.

The ABS said retail turnover was "boosted" by "bargain chasing" amid early than usual end-of-financial year sales events.

Energy and materials lead with Brent crude oil hitting a two-month high of $US87.46 on Middle East tensions, coking coal up 2.8 per cent to $US261 on Anglo American's coal mine fire and iron ore futures hitting a four-week high of $110.95.

ASX 200 share trading value is about 20 per cent below average.

Focus turns to FOMC minutes overnight.

The US market will trade a shortened session before Thursday's holiday.

11:41 am July 3, 2024 Highlight

Retail sales, building approvals beat estimates

David Rogers

Australia's monthly retail sales and building approvals data beat market estimates.

May retail sales growth accelerates to a four-month high of 0.6 per cent month-on-month versus 0.3 per cent expected after a 0.1 per cent rise in April.

“Retail turnover was boosted this month by watchful shoppers taking advantage of early end-of-financial year promotions and sales events," the ABS says.

“Retail businesses continue to rely on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months.

“Despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms."

Clothing, footwear, and personal accessory retailing had the largest rise (+1.6 per cent) following two consecutive falls in April and March.

Household goods retailing (+1.1 per cent) and other retailing (+0.2 per cent) also rose, while department stores fell (-0.9 per cent).

“Many retailers started end-of-financial year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures,” the ABS added.

May building approvals rise 5.5 per cent versus 1.6 per cent expected after a 1.9 per cent rise in April which was revised up from a 0.3 per cent fall first reported.

The data sparked a short-lived rise in the Australian dollar and bond yields and trimmed intraday gains in the local share market as they may increase the risk of a restart of rate hikes by the RBA at its next meeting in August.

11:33 am July 3, 2024

AusSuper announces 'solid' returns

Joseph Carbone

The nation's largest superannuation fund AustralianSuper announces "solid" returns for FY24 on strong growth in domestic and overseas share markets.

Members with their retirement savings in the balanced investment option saw a return of 8.5 per cent and members who opted for the high growth option saw a 10.2 per cent return.

"Despite market volatility driven largely by geopolitical tensions and a complicated economic landscape, AustralianSuper has delivered solid returns to members to help them achieve their best financial position in retirement," AusSuper chief investment officer Mark Delaney said. "Equities have done well due to strong earnings growth from technology companies in the US and strong consumer spending in Australia and overseas, which helped to drive up company earnings.

"Another contributing factor was easing inflation levels that boosted investor confidence, which in turn, lifted markets to higher levels."

11:21 am July 3, 2024

Coming up: retail sales, building approvals data

David Rogers

Australia's May retail sales and building approvals data are due at 1130am AEST.

Bloomberg's consensus estimates show a 0.3 per cent rise in retail sales and a 1.6 per cent rise in building approvals is expected by markets.

NAB expects a 0.2 per cent rise in retail sales amid flat aggregate nominal spending and ongoing softness in overall consumption growth in the June quarter.

Meanwhile detached house approvals have been moving sideways at soft levels, while apartment approvals are even softer and threatening to weaken further.

11:14 am July 3, 2024

ACCC gives interim nod to Armaguard save

Joseph Carbone

The ACCC gives interim authorisation to the deal struck by the Australian Banking Association, the Big Four banks and retailers Coles, Woolworths and Wesfarmers to save Armaguard by providing financial aid.

The cash-in-transit business was on the brink of collapse before the recent deal, which will see it be given aid to stay afloat for 12 months.

Acting Australian Competition and Consumer Commission chair Mick Keogh said: "At this time, we have only provided interim authorisation on the financial support aspect of this package".

"We consider that the financial assistance to Armaguard increases the likelihood of a more sustainable supply of wholesale cash distribution services as well as access to cash by businesses and members of the public across Australia."

11:07 am July 3, 2024

Littleproud takes aim at $45m Made in Aus ad blitz

David Littleproud says the National Party will reserve its judgement on Labor’s Future Made in Australia Act until they have been offered an opportunity to scrutinise the legislation.

Tabled in the House of Representatives by Treasurer Jim Chalmers on Wednesday morning, Labor’s future Made in Australia Act will provide the regulatory regime which sits behind the series of tax incentives, grants and loans to prop up green manufacturing in a move akin to the Biden Administration’s Inflation Reduction Act.

Speaking on Sky News, Mr Littleproud said the policy would be scrutinised before the Nationals would determine whether to support the plan. “We'll look at the legislation, we'll work through it and we'll make an assessment as we see the details until it's been tabled,” Mr Littleproud said. “We work through that, then obviously, we’ll reserve our judgement.”

“What we do know is they're prepared to spend $45m of Australian taxpayers dollars on an advertising campaign,” he said.

– Jack Quail